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INSURANCE CLAIMS: POLICY REQUIRES DOCUMENTATION DELIVERY BEFORE APPRAISAL OF LOSS
It never was “if.” It is when!
Living in Florida, we have observed that hurricanes are more and more frequent. Not always making landfall, but dangerous in their approach.
On the heal of these storms, whether we are in a hurricane’s “cone of death” or buffeted by a gale, association claims for property damage will follow. It is imperative for community associations to know what its insurance policy will cover and how can it obtain benefits if damage occurs. Also, there is a need to properly document claims, and retain documentation. This is not just in the abstract, education should include directors, managers and owners.
Recently, a Florida appellate court addressed procedures for processing an association’s storm property damage claim. The facts in American Coastal Insurance Company v. Ironwood, Inc., 46 Fla. L. Weekly D 2315 (Fla. 2nd DCA, October 27, 2021) indicate that in 2017, Ironwood, a Naples condominium association, filed an insurance claim for roof damage caused by Hurricane Irma. After insurer American Coastal determined that the roof damage was covered under the policy, the insurer made payments and the claim seemed to be resolved.
Not quite resolved because two years later, the association filed another claim for damage caused by Hurricane Irma, but this time to doors and windows. The insurer requested additional documents from the association. Before the insurer made a determination on the claim, and without providing all of the documents requested by the insurer, the association invoked its right to an appraisal pursuant to their insurance policy and filed a lawsuit against the insurer for breach of contract.
The association moved for a stay of the litigation to place the lawsuit on hold, and also moved for an order compelling an appraisal. The trial court granted the motion compelling an appraisal.
The Florida appellate court reversed the trial court order of appraisal. The court explained that the insurance policy required that the insured provide to the insurer all documents that the insurer “may reasonably require.” Under the insurance policy the association was not entitled to an appraisal of its property damage if the insured does not respond to the request for documents. The trial court failed to address whether the insurer’s request for documents was reasonable before compelling an appraisal.
The appellate court further explained that the insurance policy defined a supplemental claim as any additional claim for losses from the same hurricane. While the original roof claim was recognized by the insurer to be caused by Hurricane Irma, the windows and doors claim was in some respects a new claim. The “alleged losses related to damage to windows and doors, is therefore a supplemental claim for which a coverage determination must be made before the contractual appraisal right ripens.”
This decision emphasizes the importance of properly complying with an insurer’s request for documents based on an insurance policy if an association files a claim for property damage based on that policy. The insurer is entitled to all documents it may reasonably require before it makes its decision as to whether the damage is covered by an insurance policy. This also means that associations should properly document and retain documentation of claims. If you have any questions as to what is required to be submitted, contact your association’s counsel.